Yesterday RTL Group, Europe’s largest broadcaster, announced that it has acquired a majority 65 percent stake in SpotXchange, a programmatic video ad platform. The deal is likely to have significant implications for the European programmatic video market, and VAN spoke to two of the key players in the deal: Mike Shehan, CEO of SpotXchange and Rhys Noelke, Vice President of Business Development at RTL Group. The topics discussed included the strategic motivations, the relationship between media and ad tech, the implications for the wider market and programmatic TV.

Congratulations on the deal. Firstly, could you just explain why RTL have bought a majority stake in SpotXchange?

Rhys Noelke: Thanks. Online video is a core part of our digital strategy. First we have continuously expanded our premium catch-up TV services of our broadcasters, then last year we invested in Broadband TV, a leading multichannel network with additional investments in Stylehaul and Divimove. Three years ago we counted two billion video views, last year already 17 billion – and this year, we’re expecting almost 40 billion views. So the logical next step was to increase our monetization capabilities and identified the programmatic video space as high growth area. As SpotXchange is a pioneer in this space, they were an obvious choice for us.

So is the acquisition primarily about monetising your own properties or do you intend to build out the portfolio of third party businesses?

RN: Both. SpotXchange will continue to build out the business by working with publishers and video offerings outside the group. We think there are a lot of publishers out there who are still trying to work out how to monetise video, and we’d like to accelerate the development of programmatic video from the supply side , especially in Europe and in APAC.

Many independent ad tech companies use their independence from the media side of the industry as part of their pitch. Is losing that independence going to be a problem for SpotXchange going forward?

Mike Sheehan: For a lot of publishers, they’re more concerned about Facebook and Google who compete with them for brand dollars. The way that RTL Group structures their assets is that the various parts operate independently but in a loosely collaborative manner. So there are no conflicts of interest. For example, FremantleMedia, part of RTL Group, creates and sells TV content to various competitors to various broadcasters. SpotXchange is extremely strong in the US and we’ve seen agencies move quickly to adopt programmatic buying, but the sell-side of the market is more conservative.

Many large publishers and broadcasters simply choose to partner with third party technology providers. However, many of those providers also compete against RTL in online video. Is it important to RTL to have a certain amount of technological autonomy, and was this part of the reason you have taken a stake in SpotXchange?

RN: We’re used to being a very independent player in our own right. We want to retain control of our sales process and to not be dependent on others. As premium inventory is scarce, we feel that SpotXchange can scale across all inventory segments and geographies.

Up until now, the various companies in the RTL Group have been free to choose the ad tech vendors they want to work with. Will this continue, or is SpotXchange going to be the sole provider for your companies?

RN: We have taken a stake in SpotXchange because we believe it’s the best fit for us, so it would only make sense for us to use the technology across the group. But let’s not forget: we are a decentralised group, co-operation will grow over time. Most importantly, SpotXchange is a great investment in its own right – and it’s also imperative for SpotXchange that they can run and further develop their business autonomously. Our goals and ambitions are perfectly aligned.

RN: There’s no doubt that the worlds of TV and online video are converging. But, to be honest, this will still take a considerable amount of time.

MS: Just to add to that, one of the reasons we love this partnership is that our goal is to be everywhere across connected TV, desktop, mobile and TV. We have a very strong relationship on the product development front. We’re doing extremely well here in the US and we’re growing extremely quickly, but we’re not as big in EMEA and APAC, so we we feel that working with RTL will provide us with a huge opportunity. Working in over 150 countries, we’ll be able to rapidly accelerate our growth in these markets.